New California legislature passed and Governor Jerry Brown recently signed a controversial measure that would allow California utilities to pass on to their customers some of the legal costs associated with wildfires caused by the negligence of these utility companies. Under the measure, which was signed into law by Governor Brown on September 21st, California utilities will now be able to issue bonds and recover the costs of wildfires caused by the utilities’ own negligence directly from utility customers in California. Although some may consider this a necessary step given the costs of wildfires in the past two years that now have run well into the billions of dollars, it also amounts to a consumer bailout of the state’s largest utility, Pacific Gas & Electric (PG&E), and other California utilities due to wildfires over the past two fire seasons that Cal Fire has determined were the result of the utilities’ own actions in not properly trimming vegetation or tree branches that were too close to power lines in northern California. This is a disappointing result given that money that will be used to bail out utilities could instead be used to assist California homeowners dealing with wildfire damage.
As any Golden State resident can tell you, the last two years have been disastrous for Californians, who have been subjected to an unprecedented two wildfire seasons in a row. These blazes have caused widespread damage to homes and businesses and resulted in thousands of acres being burned and dozens of deaths across the state. According to an article from the Santa Rosa Press-Democrat, over the past two years, wildfires have killed 57 people in California, destroyed more than 9,000 homes and torched more than 4,000 square miles.
The most deadly and destructive series of fires of the past two wildfire seasons took place in October 2017, when the Tubbs Fire in Napa, Sonoma and Lake Counties in Northern California killed 22 people and resulted in the destruction of more than 2,800 homes (5% of the total homes in the town), 5,800 structures and more than $1.2 billion in damage in the town of Santa Rosa alone. However, the Tubbs Fire, like many of the other fires that have broken out across California during the last two historically disastrous fire seasons, were determined by Cal Fire to be the result of PG&E and other utilities not taking proper care to ensure that low-hanging vegetation and tree branches had been trimmed. This is a particular problem during a time of historically low rainfall levels and hot temperatures which, when combined with a utility’s careless failure to take steps that may have prevented billions of dollars in damage, raises serious concerns regarding the recent legislation.
The package of 29 separate bills signed by California Governor Jerry Brown on September 21st contained a number of separate provisions to address the issue of the wildfires raging throughout California, and specifically, how to pay for the devastation wrought by these blazes on California homes and businesses. By far the most controversial of the measures was legislation that will allow the utilities that caused last year's devastating wildfires in Northern and Central California (including the Tubbs Fire) to issue bonds to help pay for their liability costs attributable to these wildfires and opens the door for those costs to eventually be passed on to ratepayers on their monthly bills. The measure was essentially a bailout for PG&E, which faces the potential of billions of dollars in legal exposure as a result of the 2017 wildfire season and spent $1.7 million lobbying for the legislation. One news report even hinted the utility may face bankruptcy if something was not done to help it defray the costs from the 2017 fire season.
Cal Fire has determined that PG&E equipment caused 16 major fires across Northern California in October 2017, and in 11 of those fires the utility had failed to keep tree limbs clear from its equipment, a simple fix that could have been avoided by more carefully trimming trees and vegetation along its transmission lines. PG&E has approximately $840 million in insurance coverage available to help defray the cost of the Tubbs Fire and other blazes but has stated it expects to pay at least $2.5 billion in damage claims related to the Tubbs Fire and the other ten October 2017 wildfires its equipment caused. The legislation will allow it to sell bonds to cover its legal costs that will be then paid back by the utility’s customers through regular charges on their monthly power bills. In addition to the controversial provision for a potential bailout of PG&E, the package of wildfire legislation also included $1 billion over five years to assist utilities with vegetation management and also gave Cal Fire new power to work with private property owners to perform controlled burns on private land to prevent future wildfires from spreading.
At JT Legal Group, our experienced wildfire insurance claims lawyers can assist you if you have suffered damage to your home or business as a result of a blaze during California’s historic wildfire seasons over the past two years. Our experienced California fire damage attorneys can assist in resolving any number of legal problems related to damage which has occurred as a result of fire, whether it involves damage to your home, business, or any other structure or property. While you are busy putting your life back together in the aftermath of a wildfire, our experienced attorneys will go to work for you and deal with your insurer to ensure that you can focus on rebuilding your life while we handle obtaining and negotiating maximum compensation for your damages suffered in a California wildfire.
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— Michael Avanesian, Esq.
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